Bonuses at the RBS given the go-ahead

The payout is thought to have been given the green light by UK Financial Investments (UKFI), the body set up to manage the Government's stakes in banks.

RBS, 84 per cent taxpayer-owned after a string of bailouts, is expected to post losses of more than 5bn for the year to December.

But it is the bank's controversial bonus pot that will prompt howls of outrage from the public as it comes despite the deficit and an expected admission that it has not met Government lending targets, which were laid out as part of the terms of its bail-out.

RBS boss Stephen Hester, who has waived his own payout for last year, has said the bank must give competitive bonuses to its key staff but that it would pay "the minimum we can get away with" to the investment bankers.

They will receive their bonuses in shares rather than cash and this could be subject to clawback at a later date. The only cash bonuses will be paid to those earning under 39,000, who will get a maximum of 2,000 in cash.

While the bank's results are likely to make grim reading, its losses for 2009 pale in comparison with the 24.1bn shortfall for the year before – a UK corporate record.

As the economic shocks tore through other areas, investment banking is likely to be one of the few highlights in the results.